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of 1 9 New oil and gas industry Tax Burdens effective April 1, 2016 Outcomes from the First Special Session of the Louisiana Legislature in 2016
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New oil and gas industry Tax Burdenseffective April 1, 2016Outcomes from the First Special Session of the Louisiana Legislature in 2016
In the Spring of 2016, State Officials did not create a long-term financing solution or comprehensive tax reform.
Instead, they only raised new revenue.
Sales taxes were the mechanism selected to raise the most revenue in the quickest time. The Legislature raised the existing state sales tax by another penny, mostly without exemptions, and they eliminated more than 150 statutory exemptions on the previous 4% state sales tax.
As a result all sectors of the oil and gas industry will be severely impacted. However, the final impact remains unclear, as the Louisiana Department of Revenue has yet to take fully into account all issues with the removal of these exemptions.
The oil and gas industry was told that it would not be the target of new or increased taxes. Despite that statement, the end result puts even more Louisiana producers and suppliers at risk.
On the following pages you will find the newly imposed sales tax percentages. These new sales taxes on the oil and gas industry are a result of the removal of exemptions and exclusions previously allowed on purchases, repairs and other transactions.
Table 1: Total percentage of taxes imposed [p.3-4]
Table 2: Percentage of taxes imposed specifically by Act 25 [p.5-6]
Table 3: Percentage of taxes imposed specifically by Act 26 [p.7-8]
Important Dates:
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Tax Implementation Tax Decrease or Repealed
April 1, 2016 June 30, 2016
July 1, 2016 June 30, 2018
July 1, 2018 March 31, 2019
LA. Revised Statute
Description Effective 4/1/16 - 6/30/16
Effective 7/1/2016 - 6/30/2018
Effective 7/1/18-3/31/19
47:301 (13)(d)
Refinery Gas 5% 5% 4%
47:301(3)(b) Separately stated labor charges on property repaired out-of-state
5% 3% 0%
47:301(3)(i) 47:301(13)(k)301(28)(a)
Purchases of manufacturing machinery and equipment used in manufacturing process
2% 1% 0%
47:301(3)(k) Purchases of tangible personal property consumed in manufacturing process (fuses, belts, felts, wires, conveyor belts, lubricants and motor oils). Purchases of repairs and maintenance of manufacturing machinery and equipment. Limited to certified manufacturers with NAICS codes 3211-3222 and 113310
5% 3% 0%
47:301 (7)(b)
Rentals or leases of certain oilfield property for re-lease or re-rental
5% 3% 0%
47:301 (10)(a)(iii)
Sales of tangible personal property for lease or rental (other than automobiles)
4% 2% 0%
47:301 (10)(e)
Isolated or occasional sales of tangible personal property
4% 2% 0%
47:301 (10)(l)
Purchases of certain pollution control equipment used to control industrial pollution
5% 3% 0%
47:301 (10)(y)
Manufacturing machinery and equipment used to produce or extract unblended biodiesel. See R.S. 47:301(3)(i) to determine manufacturer eligibility
5% 3% 0%
47:301 (10)(bb)
Natural gas held, used, or consumed in providing natural fas storage services or operating natural gas storage facilities.
5% 3% 0%
47:301 (10)(gg)
Sales of anthropogenic carbon dioxide for use in a qualified tertiary recovery project. Project must be approved by DNR
5% 3% 0%
47:301 (14)(g)
Repairs performed in Louisiana when the repaired property is derived out of state
4% 2% 0%
LA. Revised Statute
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Table 1 Act 25 & Act 26 TOTAL Combined - Taxable Rate of Transactions for Exemptions & Exclusions
47:301 (14)(g)(iii)
Labor, materials, services and supplies used for the repair, renovation or conversion of any drilling rig or machinery and equipment which become component parts of any drilling rig used exclusively for the exploration or development of minerals in federal offshore ares. See R.S. 47:305(i)
5% 3% 0%
407:301(16)(h)
Certain custom computer software 5% 3% 0%
407:301(18)(a)(iii)
Tangible personal property other than vehicles acquired for lease or rental.
4% 2% 0%
47:301(18)d)(ii)
Tangible personal property created or derived as a residue or byproduct from the processing of raw materials for resale when used by the manufacturer of such property. Does not include refinery gas.
5% 3% 0%
47:305(D)(1)(b)
Sales of steam 5% 4% 1%
47:305(D)(1)(c)
Sales of water. Does not apply to water sold in containers such as a jug, bottom or carton
5% 4% 1%
47:305(D)(1)(d)
Sales of electricity for nonresidential use 5% 4% 1%
47:305(D)(1)(g)
Sales of natural gas for nonresidential use 5% 4% 1%
47:305(I) Repairs and materials used on drilling rigs and equipment used exclusively for exploration and development of minerals outside the territorial limits of the state in federal offshore waters. See exclusion under R.S. 47:301(14)(g)(iii). See RIB No. 07-016 missed 5/22/07
5% 3% 0%
47:305.10 Property purchased for exclusive use outside of the state (offshore).
4% 2% 0%
47:305.19 Receipts from the lease or rental of vessels for use offshore in mineral production, or for providing services to those engages in mineral production.
5% 4% 1%
Description Effective 4/1/16 - 6/30/16
Effective 7/1/2016 - 6/30/2018
Effective 7/1/18-3/31/19
LA. Revised Statute
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Table 1 Continued Act 25 & Act 26 TOTAL Combined- Taxable Rate of Transactions for Exemptions & Exclusions
LA. Revised Statute
Description Effective 4/1/16 - 6/30/16
Effective 7/1/2016 - 6/30/2018
Effective 7/1/18-3/31/19
47:301 (13)(d) Refinery Gas 4% 4% 4%
47:301(3)(b) Separately stated labor charges on property repaired out-of-state
4% 2% 0%
47:301(3)(i) 47:301(13)(k)301(28)(a)
Purchases of manufacturing machinery and equipment used in manufacturing process
1% 1% 0%
47:301(3)(k) Purchases of tangible personal property consumed in manufacturing process (fuses, belts, felts, wires, conveyor belts, lubricants and motor oils). Purchases of repairs and maintenance of manufacturing machinery and equipment. Limited to certified manufacturers with NAICS codes 3211-3222 and 113310
4% 2% 0%
47:301 (7)(b) Rentals or leases of certain oilfield property for re-lease or re-rental
4% 2% 0%
47:301 (10)(a)(iii)
Sales of tangible personal property for lease or rental (other than automobiles)
4% 2% 0%
47:301 (10)(e) Isolated or occasional sales of tangible personal property
4% 2% 0%
47:301 (10)(l) Purchases of certain pollution control equipment used to control industrial pollution
4% 2% 0%
47:301 (10)(y) Manufacturing machinery and equipment used to produce or extract unblended biodiesel. See R.S. 47:301(3)(i) to determine manufacturer eligibility
4% 2% 0%
47:301 (10)(bb) Natural gas held, used, or consumed in providing natural fas storage services or operating natural gas storage facilities.
4% 2% 0%
47:301 (10)(gg) Sales of anthropogenic carbon dioxide for use in a qualified tertiary recovery project. Project must be approved by DNR
4% 2% 0%
47:301 (14)(g) Repairs performed in Louisiana when the repaired property is derived out of state
4% 2% 0%
LA. Revised Statute
Description
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Table 2 Act 25 - Taxable Rate of Transactions for Exemptions & Exclusions Imposed by Act 25
47:301 (14)(g)(iii)
Labor, materials, services and supplies used for the repair, renovation or conversion of any drilling rig or machinery and equipment which become component parts of any drilling rig used exclusively for the exploration or development of minerals in federal offshore ares. See R.S. 47:305(i)
4% 2% 0%
407:301(16)(h) Certain custom computer software 4% 2% 0%
407:301(18)(a)(iii)
Tangible personal property other than vehicles acquired for lease or rental.
4% 2% 0%
47:301(18)d)(ii) Tangible personal property created or derived as a residue or byproduct from the processing of raw materials for resale when used by the manufacturer of such property. Does not include refinery gas.
4% 2% 0%
47:305(D)(1)(b) Sales of steam 4% 3% 1%
47:305(D)(1)(c) Sales of water. Does not apply to water sold in containers such as a jug, bottom or carton
4% 3% 1%
47:305(D)(1)(d) Sales of electricity for nonresidential use 4% 3% 1%
47:305(D)(1)(g) Sales of natural gas for nonresidential use 4% 3% 1%
47:305(I) Repairs and materials used on drilling rigs and equipment used exclusively for exploration and development of minerals outside the territorial limits of the state in federal offshore waters. See exclusion under R.S. 47:301(14)(g)(iii). See RIB No. 07-016 missed 5/22/07
4% 2% 0%
47:305.10 Property purchased for exclusive use outside of the state (offshore).
4% 2% 0%
47:305.19 Receipts from the lease or rental of vessels for use offshore in mineral production, or for providing services to those engages in mineral production.
4% 3% 1%
Effective 4/1/16 - 6/30/16
Effective 7/1/2016 - 6/30/2018
Effective 7/1/18-3/31/19
LA. Revised Statute
Description
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Table 2 Continued Act 25 - Taxable Rate of Transactions for Exemptions & Exclusions Imposed by Act 25
LA. Revised Statute
Description Effective 4/1/16 - 6/30/16
Effective 7/1/2016 - 6/30/2018
Effective 7/1/18-3/31/19
47:301 (13)(d)
Refinery Gas 1% 1% 0%
47:301(3)(b) Separately stated labor charges on property repaired out-of-state
1% 1% 0%
47:301(3)(i) 47:301(13)(k)301(28)(a)
Purchases of manufacturing machinery and equipment used in manufacturing process
1% 0% 0%
47:301(3)(k) Purchases of tangible personal property consumed in manufacturing process (fuses, belts, felts, wires, conveyor belts, lubricants and motor oils). Purchases of repairs and maintenance of manufacturing machinery and equipment. Limited to certified manufacturers with NAICS codes 3211-3222 and 113310
1% 1% 0%
47:301 (7)(b) Rentals or leases of certain oilfield property for re-lease or re-rental
1% 1% 0%
47:301 (10)(a)(iii)
Sales of tangible personal property for lease or rental (other than automobiles)
0% 0% 0%
47:301 (10)(e)
Isolated or occasional sales of tangible personal property
0% 0% 0%
47:301 (10)(l) Purchases of certain pollution control equipment used to control industrial pollution
1% 1% 0%
47:301 (10)(y)
Manufacturing machinery and equipment used to produce or extract unblended biodiesel. See R.S. 47:301(3)(i) to determine manufacturer eligibility
1% 1% 0%
47:301 (10)(bb)
Natural gas held, used, or consumed in providing natural fas storage services or operating natural gas storage facilities.
1% 1% 0%
47:301 (10)(gg)
Sales of anthropogenic carbon dioxide for use in a qualified tertiary recovery project. Project must be approved by DNR
1% 1% 0%
47:301 (14)(g)
Repairs performed in Louisiana when the repaired property is derived out of state
0% 0% 0%
LA. Revised Statute
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Table 3 Act 26 - Taxable Rate of Transactions for Exemptions & Exclusions Imposed by Act 26
47:301 (14)(g)(iii)
Labor, materials, services and supplies used for the repair, renovation or conversion of any drilling rig or machinery and equipment which become component parts of any drilling rig used exclusively for the exploration or development of minerals in federal offshore ares. See R.S. 47:305(i)
1% 1% 0%
407:301(16)(h)
Certain custom computer software 1% 1% 0%
407:301(18)(a)(iii)
Tangible personal property other than vehicles acquired for lease or rental.
0% 0% 0%
47:301(18)d)(ii)
Tangible personal property created or derived as a residue or byproduct from the processing of raw materials for resale when used by the manufacturer of such property. Does not include refinery gas.
1% 1% 0%
47:305(D)(1)(b)
Sales of steam 1% 1% 0%
47:305(D)(1)(c)
Sales of water. Does not apply to water sold in containers such as a jug, bottom or carton
1% 1% 0%
47:305(D)(1)(d)
Sales of electricity for nonresidential use 1% 1% 0%
47:305(D)(1)(g)
Sales of natural gas for nonresidential use
1% 1% 0%
47:305(I) Repairs and materials used on drilling rigs and equipment used exclusively for exploration and development of minerals outside the territorial limits of the state in federal offshore waters. See exclusion under R.S. 47:301(14)(g)(iii). See RIB No. 07-016 missed 5/22/07
1% 1% 0%
47:305.10 Property purchased for exclusive use outside of the state (offshore).
0% 0% 0%
47:305.19 Receipts from the lease or rental of vessels for use offshore in mineral production, or for providing services to those engages in mineral production.
1% 1% 0%
Description Effective 4/1/16 - 6/30/16
Effective 7/1/2016 - 6/30/2018
Effective 7/1/18-3/31/19
LA. Revised Statute
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Table 3 Continued Act 26 - Taxable Rate of Transactions for Exemptions & Exclusions Imposed by Act 26
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